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Eli Lilly pays $29 million in SEC settlement

Eli Lilly and Company resolved FCPA civil charges brought by the Securities and Exchange Commission based on bribes to government officials in Russia, Brazil, China, and Poland.

Lilly agreed Thursday to pay $29.4 million to the SEC. That amount included disgorgement of $13.9 million, prejudgment interest of $6.7 million, and a penalty of $8.7 million.

Lilly, an Indianapolis-based pharmaceutical maker, didn’t admit or deny the SEC’s allegations.

The settlement is subject to final court approval.

In a civil complaint filed in federal court in Washington, D.C., the SEC alleged that Lilly’s subsidiary in Russia used offshore ‘marketing agreements’ to pay millions of dollars to third parties chosen by government customers or distributors.

Lilly, the SEC said, knew ‘little or nothing about the third parties beyond their offshore address and bank account information.’

The offshore entities provided no real services and sometimes funnelled money to government officials in order to win business, the SEC said.

Even after Lilly learned about possible FCPA violations in Russia and elsewhere, it didn’t stop the offshore marketing agreements for more than five years.

Other subsidiaries in Brazil, China, and Poland also made improper payments to government officials or third-parties associated with them, the SEC said.

‘Employees at Lilly’s subsidiary in China falsified expense reports in order to provide spa treatments, jewelry, and other improper gifts and cash payments to government-employed physicians,’ according to the SEC.

In Brazil, a distributor paid bribes on Lilly’s behalf to win $1.2 million in sales of a Lilly drug to state government institutions.
And in Poland, a subsidiary paid eight bribes ‘totaling $39,000 to a small charitable foundation that was founded and administered by the head of one of the regional government health authorities in exchange for the official’s support for placing Lilly drugs on the government reimbursement list,’ the SEC said.

The SEC said it had help with the investigation from the DOJ’s Fraud Section and the Federal Bureau of Investigation.

The DOJ didn’t announce any criminal charges against the company.

The investigation of Eli Lilly began in 2003, making it one of the longest running FCPA investigations.

The SEC said Lilly’s violations in Russia dated from 1994 to 2005.

In China, the bribery occurred in 2006 and 2007.

In Poland the offenses happened from 2000 to 2003, and in Brazil in 2007.


The SEC’s Litigation Release No. 22576 (December 20, 2012) in Securities and Exchange Commission v. Eli Lilly and Company, Civil Action No. 1:12-cv-02045 (D.D.C.) is here.

A copy of the SEC’s civil complaint can be downloaded in pdf here.

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